Hamish Champ: Wanna go tie-free? Check out the Emerald Isle
22 June, 2009
"Many Irish pubs were suffering, he said. No doubt because of the smoking ban, I opined knowingly, ready to roll out facts and figures about the effects of the ban. Not quite, he replied"
Despite my own political stance being positioned somewhat to the left of centre the newspaper I regularly choose to read is the good ol’ Daily Telegraph.
Liberal chums of mine scoff at this, but I gamely retort that they are missing the crux of the matter. I mean, what’s the point of reading stuff you agree with all the time, stuff that isn’t going to challenge your own perceived wisdoms?
Continuing my devil's advocacy theme of last week, where's the harm in considering viewpoints that at least make you think about familiar topics from a different angle? You might not agree with them, but they can add perspective. Hence my near-addiction to the Peterborough column and its ilk.
Now I know that a number of people don’t agree with everything I write in this here weekly blog, especially when it comes to my personal views on stuff like the smoking ban, customer service in pubs and the moral conundrum of close relationships between human beings and beasts of the pasture and forest.
That said, last week I meets an investment type who knows the Irish pub market quite well. After talking about the state of the UK licensed trade we gets to chatting about pubs in the Emerald Isle.
Many, he said, were suffering. No doubt because of the smoking ban, I opined knowingly, ready to roll out facts and figures about the effects of the ban on the licensed sector versus the cost to the Irish economy of treating people whose lungs have the consistency of a loofah and who gozz up bucketloads of pale green phlegm every day.
Nope, he replied. It was largely because many licensees had signed commercial leases with their landlords at the height of the Celtic Tiger Boom Thang™. While these were all fine and dandy at a time of the economic surge the country was then experiencing, in the current market conditions they were proving to be unsustainable. Not smoking then, but onerous leases. Sounds familiar doesn’t it?
It’s my understanding that there is no pubco model in Ireland similar to the one you’d fine here. It’s all free trade.
That said, licensees are restricted in the number of brewers they can deal with, since the major players have the market pretty much sewn up. So there’s little leeway there when things get tough.
Would the bigger members of the UK's brewing community have a similar field day here in the event the pubco model goes tits up? My investment friend certainly thought so. He bet the keys to his spare Porsche that a number of UK brewers would love the tie to go, since it would enable some, perhaps even many of them to hike prices.
Then there's them commercial leases waiting round the corner.
I recognise this is simplifying the situation and doubtless I'm raising points which many of my more... erudite readers will take pleasure in rebuffing, with some going so far as to call me a ‘bassoon’ and worse. But I reckon it’s still a debate worth having, one that extends beyond base name-calling. Whaddya reckon?
So, plain sailing in a tie-free world? Maybe not…
-------------------------------------------------------------------------------------------------------------------------------------
NB: I won’t be penning anything next weekend as I plan to be completely off my face at the Glastonbury Festival. Still, like me I expect you could do with the break…
Readers' comments
Hamish, I'd NEVER claim to be more erudute or better informed than you - you get to meet far more elevated figures in the pub trade than I ever do and I think perhaps you have a very good point. But I also think it's nowhere near as scary a scenario as it has been painted by the pro pubco lobby. WHEN the pubcos do go tits up, as you put it - and they will, because, behind the scenes and press releases, they already are going tits up, brewers WILL be able to hike their prices. AND SO THEY SHOULD! Take the pubco middle men spivs out of the equation and there is loads of room for brewers to get the margin they deserve for their work - AND to give thousands of individual lessees a MUCH better deal thaqn they are getting now. Pubcos are constipation in the alimentary canal of the pub trade. They keep all the profit to themselves - driving DOWN margins with brewers who are terrified of losing the massive volume sales they have with pubcos while systematically RAISING the sell on price to their estates, never passing the differential on to their tenants. Pubcos going tits up will be a massive thumbs up for everyone else. Have a great Galstonbury, may the rains not come and may your enjoyment be huge. You deserve it!
Fredrik - let's change your tiresome "smoking vs drinking" comparison so that it is ACTUALLY COMPARABLE shall we? A true comparison would be if, every time a drinker took a sip of his pint he spilled a bit onto a non-drinker next to him, or spat some foam onto a non-drinker across the room. Every time he went to the loo, he left his pint tipped over on the bar so it trickled across the room until he got back. Every now and again, he'd force the tee-totaller sitting closest to him to have a sip of his pint. Every table had an empty glass holder but when the drinker finished his pint he didn't use that, instead he threw his empty glass onto the floor (sometimes it wasn't even empty when he done this). NOW, THAT is a true comparison and you can bet your life, if drinkers conducted themselves in this way we'd now be facing a ban on drinking in enclosed public areas. Grow up...
"Perhaps if more smokers realised they are in the minority," - Ed. If ~10,000,000+ potential customers are seen as nothing but a minority, then it is not surprising that the trade is in such a mess. As I have suggested on other threads, if al fresco smoking is a trivial matter that should not affect footfall - Then why not enjoy al fresco drinking. People must be able to sit in a pub for half an hour at a time without their fix of booze. Have an OJ instead, fiddle with a beer mat, enjoy a booze free conversation, while waiting for another al fresco booze hit. People can drink a half in matter of minutes can they not? It should not be that difficult to adapt to and this way maybe more teatotalers will visit pubs. After all, people do not need to drink booze to have a good time. If people moan about it, just tell them that it's their fault that they do not use pubs as much. Blame the customers again.
Just come back from Galway. Southern Ireland, the pubs are still full. No such thing as a tie there. All free-of tie.
Ed Davies - Or perhaps it was because Ireland's wed-led turnover plummeted after the ban, just as it has here. Guinness themselves said Irish sales of the 'black stuff' fell 6 percent overall in the year to June 2004 despite a huge rise in off-trade sales for consumption at home. Lovely rural pubs disappeared for conversion into homes, offices - anything but a pub. As one landlord put it: "the cheapest thing you can buy today is an Irish pub".
Pete - perhaps people got fed up of hearing smokers moaning about how they can't sit inside and have a cigarette. Smokers moaning so much that their non-smoking friends and family would rather not go to the pub and listen to them moan. Perhaps if more smokers realised they are in the minority, and encouraged their non-smoking friends to support the pubs, and still have a laugh, then some pubs might not be having such a bad time. Unless you're so obsessed with getting your fix you can't sit down and enjoy your pint for long enough, like, strangely enough, many of our non-smoking customers can?
Pete - In the UK we've seen a similar slip from on trade to off trade (albeit over a slightly longer time-frame) BEFORE our smoking ban came into affect? To use your words, "now why might that be, I wonder"...
Hamish - Presumably those leases were considered fair and profitable at the time of signing. Since the imposition of the Irish smoking ban in 2003 the On-Off Trade split has slipped from 80-20 to 60-40, i.e. pubs have ceded 25% of their alcohol sales to the off-trade. Throughout those years personal income was rising so you can't blame economic factors. From around 2003 onwards Irish pubgoers simply fell out of love with the pub. Now why might that be, I wonder?
Blimey John, lighten up a bit! I thought it was a fair (and quite substantiated by fact, given all the whining about tied leases) comment about leases not working so well now that the economy has shifted?
I was recently in Dublin, the pubs were overfull, I spoke to one publican and in chatting was telling him about how pubcos worked, about the tied model, and he laughed untill he almost cried, to think that in England such a thing is allowed as a tied lease. He wanted to know how could a publican make a living using this model, and I replied: they dont.
What a strange and baseless blog. So when analysing the Irish pub trade we should forget all the real evidence, and take the word of a nameless 'investment type'. Are you sure you havent been warming up for your Glastonbury session? The Irish pub slump coincided with their ban and during their boom, so how can you blame anything else? Not content with this you cant resist a derisory comment about smokers. Have fun at Glastonbury, I assume your liver is a far more sturdy organ than your lungs.
Hamish - you've simply added another angle to the old adage "there's no such thing as a free lunch". It's what many of us have been trying to point out on here (and elsewhere; that the tie may go but that doesn't mean it's going to result in something better for everyone, it will just result in something different. The balance of power will end up in somebody else's hands (in the same way as the Beer Orders moved the power from breweries to PubCos - when many indivuals thought it was the saviour of the free market)...
As Neil Young will, no doubt, remind you at Glastonbury, Hamish, it will be rockin' in a (tie) free world. Untethered market forces shaping the industry with less government interference? Bring it on!